Corporate Antagonism Goes Public

In a few recent business scuffles — Time Warner vs. News Corporation, Conan vs. NBC — the public was recruited to take sides rather than remain an observer.

STEPHANIE CLIFFORD

When Time Warner Cable was tussling over fees with the News Corporation, it did something that would have been unthinkable in the backrooms where deals were once struck: it hired a political consultant to mount a public campaign against its own client.

Bruce Haynes, a Republican strategist and managing director at the Washington firm Purple Strategies, helped create ads asking customers if Time Warner should “Roll Over or Get Tough” over fees with the News Corporation’s Fox division. In November, a month before its contract with Fox expired, Time Warner Cable began running television, Internet and print ads.

“We said, we ought to get some political advice and frame it, somewhat, from those lessons,” said Sam Howe, chief marketing officer of Time Warner Cable. “Name names, and give customers some information.”

Fox and Time Warner Cable are playing nice now — they announced an agreement on Jan. 1. But the episode is just one example of how once-private business negotiations are spilling into public view.

Two weeks ago, Conan O’Brien released a statement criticizing NBC in an attempt to reach as many people as possible. The same day, Google, rather than conducting backroom negotiations with Chinese officials, posted a blog item saying it would no longer adhere to censorship policies on its Chinese sites.

And in another nasty cable fight that was resolved just last week, Scripps Networks recruited its stars from the Food Network and HGTV in ads complaining that Cablevision, a New York-area cable provider, had removed the channels from the service. In retaliation, Cablevision ran ads encouraging viewers to complain directly to the Scripps chief executive.

What’s happening, according to some observers, is a shift in how business negotiations are conducted — from closed and discreet to open and political.

“There’s a code of the past that we keep things in the boardroom and don’t go public,” said Bobby Calder, chairman of the marketing department at Northwestern University’s Kellogg School of Management. “What you’re seeing is, I think, a realization that you can go outside and gain some negotiating power.”

The campaigns play to populist sentiment, asking the public to do the right thing, an approach that also draws from politics. They create a public spectacle, a narrative that distills dull subjects like contract negotiations into a good-guy, bad-guy conflict — a Harvard Business School case study turns into a shootout with Liberty Valance.

“Customarily these kinds of decisions are business decisions that we can make rationally,” said David A. Owens, a professor of management at Vanderbilt’s Graduate School of Management. But the narrative businesses are using now “evokes an emotional response,” he said. “It makes business a drama.”

The tactics are examples of what economists call signaling: when two parties in a transaction have different information, one can transmit messages about his status or power by sending signals — or, in this case, buying advertising meant to show that the public is on his side.

“You want it to be interesting enough for people to participate in the campaign,” said Mr. Haynes, who worked on the Time Warner strategy. It seemed to work: the two companies worked out their differences. The 1.2 million visitors to the RollOverOrGetTough.com site had helped “terrifically” in the talks, Mr. Howe said.

Sunil Gupta, the head of the marketing department at Harvard Business School, said that it is difficult to measure the effectiveness of these campaigns. “I doubt that you can do a controlled experiment of any sort to truly understand the effectiveness. The effects of such P.R. efforts are generally intangible.”

And these signals can conflict, creating another hazard: by going public with customers, companies are explicitly criticizing the people on the other side of the negotiations, as Time Warner did with Fox and Conan O’Brien had been doing almost every night on NBC’s own network, until his final show on Friday.

“You can’t do that too many times — you destroy trust, you destroy a sense of protocol,” Mr. Owens said. “Negotiations have been done the way they’ve been done for a reason.”

Part of the reason for the public shift is technological. With Twitter, Facebook and Web sites, companies can solicit support easily. “If you go back 20 years, it would’ve been very, very hard to solicit feedback from millions of customers,” said Chris Nelson, director of crisis management at the public relations firm Ketchum, which advised Time Warner Cable on its strategy. “Now, it’s a piece of cake.”

On Jan. 12, Google took what spokesman Gabriel Stricker characterized as “an unusual step,” publishing a blog post announcing that human rights activists had been targets of computer attacks from China, and in response, Google would stop censoring search results in China.

“The outcome we were hoping for here is the same thing we’ve always hoped for: to be able to operate securely in China and in a way that increases access to information for our users in China,” Mr. Stricker said via e-mail.

But another outcome was a turnaround in Google’s reputation. Long criticized for acting monopolistically, Google is getting commendations from civil liberties and privacy groups and even from young people who are leaving flowers outside its offices in China.

Though he was fighting for a television time slot and not freedom of speech, Mr. O’Brien used a similar tactic when, on Jan. 12, he issued a statement on PRNewswire. Mr. O’Brien’s letter, addressed to “People of Earth,” discussed how long and hard he had worked for his “Tonight Show” hosting job, and expressed his “enormous personal disappointment” about NBC’s decision.

The Internet audience came back with overwhelming support for Mr. O’Brien, with fan groups forming on Facebook, and Twitter users declaring their support.

“If you are in this company’s negotiation, and you want more leverage, if there are hundreds of thousands of people speaking in favor of you, that certainly helps,” said Mr. Gupta.

Like Mr. O’Brien, companies are exploiting their direct ties to customers. Scripps Networks, in its battle with Cablevision, had been running ads with the Food Network stars Bobby Flay and Sandra Lee. The company also turned its sites ILoveFoodNetwork.com and ILoveHGTV.com into advocacy sites.

But Scripps did not find unanimous support there, a sign that companies run the risk of alienating not only their business partners, but their customers as well. Several respondents said Scripps “created the situation,” as one poster said. Others asked what fees it was charging Cablevision, or tried to calculate exactly how much Scripps was demanding.

The companies eventually settled on Jan. 21. But Cindy McConkey, a Scripps spokeswoman, said the company had removed its ads more than a week before that. “I think they grew weary of it,” she said of her customers. “And we did too.”

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